Declaring value added tax is when a business submits a VAT declaration via digital signature or directly at a competent tax authority. When is value added tax declared? The article below will help you answer this question.
1. What is value-added tax?
Law on Value-added tax defines value-added tax as an indirect tax imposed on the added value of goods or services arising in the process from production, circulation to consumption. Value added tax will be remittable into the state budget; according to the level of consumption of goods and services.
Goods and services used for production, trading and consumption in Vietnam (including goods and services purchased from abroad organizations and individuals) are subject to value-added tax. Except some cases are not subject to value-added tax such as agricultural products, medical services, insurance, land use rights and other financial services.
2. Declare value added tax quarterly
a. Objects subject to declaring quarterly value-added tax
For businesses already in operation, quarterly tax declaration applies to value-added taxpayers with total revenue from selling goods and providing services in the preceding year of maximum of VND 50 billion. Revenue from selling goods and providing services in the immediately preceding year is determined as follows:
– Revenue is determined as total revenue on Value-added Tax Declarations of tax periods in the calendar year (including revenue subject to value-added tax and revenue not subject to value-added tax)
– In case the taxpayer declares tax at the head office for an affiliated unit, the revenue from selling goods and providing services includes the revenue of the affiliated unit.
– For newly established enterprises, production and business activities have just begun. Therefore, value-added tax declaration is done quarterly. After full 12 months of production and business, from the next calendar year, based on the revenue from sales of goods and services of the immediately preceding calendar year (12 months) to declare value added tax according to monthly or quarterly.
For example:
Lincon Law Firm began production and business operations in January 2019. Therefore, in 2019, Lincon Law Firm declared value-added tax quarterly. By 2020, Lincon Law Firm will base on the revenue of 2019 (full 12 months of the calendar year) to determine whether to declare monthly or quarterly tax returns in 2020.
b. Quarterly tax declaration period
The quarterly tax declaration scheme remains consistently applicable throughout a given calendar year and extends its stability for a three-year duration. In practical terms, if a business ascertains that its annual revenue for the immediate preceding year does not exceed 50 billion VND, it is obligated to continue quarterly tax declarations for the subsequent three years, irrespective of whether its revenue surpasses the 50 billion VND threshold during that period. The first stable cycle is determined from October 1, 2014 to December 31, 2016.
Note:
– During the quarterly stable tax declaration cycle, if the business or tax authorities identify that the revenue for the preceding year of this stable tax declaration cycle is over 50 billion VND, the taxpayers are required to transition to monthly value-added tax declarations starting from the year immediately following that year until the end of the stability cycle.
– For businesses that have adopted quarterly tax declaration before the implementation of Circular 151/2014/TT-BTC, the first stable cycle is calculated until the end of December 31, 2016.
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or directly at a competent tax authority.
3. Declare monthly value added tax
a. Subjects declaring monthly value added tax
Enterprises declare value-added tax monthly when the value-added taxpayer has total revenue from selling goods and providing services in the preceding year of over 50 billion VND. Revenue from selling goods and providing services in the immediately preceding year is determined as follows:
– Revenue is determined as total revenue on Value-added Tax Declarations of tax periods in the calendar year (including revenue subject to value added tax and revenue not subject to value added tax).
– In case the taxpayer declares tax at the head office for an affiliated unit, the revenue from selling goods and providing services includes the revenue of the affiliated unit.
b. Monthly tax declaration period
The monthly tax declaration scheme remains consistently applicable throughout a given calendar year and extends its stability for a three-year duration. The first stable cycle is determined from October 1, 2014 to December 31, 2016.
For example:
Lincon Law Firm in 2013 had a total revenue of 57 billion VND, so it declares value-added tax monthly. In 2014, due to inspection and inspection concluding that the revenue was 48 billion VND, Lincon Law Firm still declared value-added tax monthly until the end of 2016. From 2017, a new tax declaration cycle will be redefined based on on 2016 revenue.
Note:
– During a stable monthly tax declaration cycle, if the taxpayer idenntifies or the tax authority concludes that the revenue of the immediately preceding year of this stable tax declaration cycle is 50 billion VND or less. Then taxpayers are eligible to declare value-added tax quarterly in a stable cycle. Therefore, taxpayers can choose to declare tax monthly or quarterly from the year immediately following the year of discovery until the end of the stable cycle.
– For businesses that have applied quarterly tax declaration before Circular 151/2014/TT-BTC takes effect (from November 15, 2014), the first stable cycle is calculated until December 31, 2016.
Legal basis:
- Circular No. 151/2014/TT-BTC.
- Circular No. 156/2013/TT-BTC.
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